Policy changes could create challenges for businesses
FILE PHOTO
Jim Damicis, a policy analyst and senior vice president at Camoin Associates, says the outlook for 2025 may be “too early to call” but he cites concerns about trade tariffs, the impact of stricter immigration policies on workforce shortages and a continued lack of affordable housing.
Jim Damicis, a policy analyst and senior vice president at Camoin Associates, says the outlook for 2025 may be “too early to call” but he has some concerns.
Damicis cites concerns about trade tariffs, the impact of stricter immigration policies on workforce shortages and a continued lack of affordable housing.
President-elect Donald Trump’s intention to significantly increase trade tariffs are an immediate concern, he says.
“Increased tariffs will have little to no impact if they are modest or used as a negotiating tactic over the short term to reposition the U.S. in global trade markets or other policy goals,” Damicis says. “However, the impact will be substantial if they are relatively high over a long period and lead to trade wars.”
The Maine companies that could be hit include ones in agriculture, seafood, food processing and forest products. Higher tariffs could also affect companies that rely heavily on imports and exports, particularly in the areas of advanced manufacturing and biomedical.
“On the positive side, in the longer term, tariffs can lead to increased domestic supply and demand growth for U.S. companies, leading to increased employment and investment. This can partially offset the foreign export impacts for some industries and businesses,” he says. “Additionally, with the threat or implementation of tariffs, we will likely see increased opportunities for foreign direct investment into the U.S. as foreign companies look for ways to get into the U.S. domestic supply chains.”
Immigration
If stricter immigration policies are enacted, as promised, an already tight labor market could get even tighter.
“This would add to the current lack of employment to meet industry demand,” he says. Again, the industries affected would involve natural resources, fishing and agriculture, as well as food production and tourism. The state’s professional and technical industries and R&D efforts could also suffer, he says.
Interest rates and housing
Trends suggest that interest rates are likely to remain at current levels or slightly evaluated due to anticipated modest cuts by the Federal Reserve to prime rates, Damicis says.
That means interest rates will remain relatively high, and that in turn will make the cost of buying a home that much more challenging.
“As a result, states and localities must take aggressive approaches to support affordable housing development, including subsidies for new housing development and rehab development, along with zoning and land use changes to enable development,” Damicis says. “Communities and regions that do not take aggressive approaches will have a harder time supporting economic and commercial development.”
Small business outlook
Going into 2025, small businesses will have be nimble.
“The impact on small businesses will greatly depend on the markets and local economic conditions in which they exist. It will require planning and the ability to adapt to investment in new markets and opportunities, which can be difficult for small businesses that may be constrained by debt, small profit margins, and the inability to pivot to different markets,” he says.
And he offers word of caution about what could be a contentious policy environment in Congress.
“A danger sign to watch is the political and policy environment. Political instability and division continue to lead to the inability to pass legislation that supports market stability and growth,” he says.
“This includes passing budgets while taking into consideration lowering federal debt, taking a modest approach to lowering taxes on the wealthy, passing bipartisan immigration policies that limit the flow of illegal immigrants without going too far, too quickly and dramatically reducing the available workforce, and policies that compact the effect of high interest rates and construction costs that impact workforce housing. A divisive policy and political environment are often overlooked in economic development and require citizens, businesses, and communities to start and continue engaging in conversations.”
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